Selecting the Best Annuity & Retirement Income Advisor

Mom always said; “If you don’t have anything good to say, don’t say anything at all.”

Well, we want you to know that this rule does not apply to annuities. As Annuity Guys®, we may be a tad-bit more sensitive to reading the negativity spewed by some writers when it comes to annuities; however, it does appear that any increase in complaints by investors or consumers just comes down to one particular type of annuity – the variable annuity^#.

Watch as Dick and Eric discuss complaints on annuities and other financial products.

**Guarantees, including optional benefits, are backed by the claims-paying ability of the issuer, and may contain limitations, including surrender charges, which may affect policy values. During this segment, Dick and Eric are referring to Fixed Annuities unless otherwise specified.

Overall, annuity complaints actually decreased in 2013, but for the popular media it appears to be a lot more fun to talk about the high commissions, high fees, and bad advisors that offer theses products. You really have to dig to find an article that compares the number of complaints from mutual fund^{^}s and stock transactions — which far outpace those from annuity sales.

As Annuity Guys®, we are on record as stating that an annuity is not where you should put all your money, but it can be a great location to place dollars that will used to fund retirement income. Annuities are a financial tool and when used properly can alleviate risk to your portfolio.

You would never guess this article cites the fact that nine out of ten annuity owners are at least somewhat satisfied…

 Angry Annuity Clients Seek Damages

By Matthew Heimer

When stock markets are humming along nicely, customers are less likely to complain about their brokers and financial advisers: 2013 was on pace to be the fourth year in a row of sharp declines in the number of arbitration cases filed with the Financial Industry Regulatory Authority (Finra), the brokerage industry’s self-regulatory body. But as Matthias Rieker reports this week in The Wall Street Journal, complaints about one kind of investment remain stubbornly high. The outlier: Variable annuities.

Variable annuities usually offer a retirement saver a **guaranteed future payout, along with a chance of increasing the value of the saver’s initial investment depending on how markets perform; investments in many of these annuities can be tax-deferred. But they’ve long exasperated consumer advocates because of their relatively high commissions and fees, along with their often-impenetrable rules about what, exactly, an investor’s account is worth at any given time.

As Rieker reports, “In 2012, the variable annuity^# was the only class of security for which arbitration claims increased”; last year, the total number of annuity complaints dropped about 20%, but complaints in other asset categories dropped far faster. […Read More at MarketWatch]

Video Transcription:

Dick: And I’m Dick.
Eric: Hello, I’m Eric and we’re the annuity guys.
Dick: Well, Eric, are annuity complaints on the rise.
Eric: No… Yes.. No… Ours? no!
Dick: Depends on which annuity complaints you want to talk about.                                                                       Eric: And that’s exactly the case. And then we see the black eye of the industry coming out in the open ever again with the old variable annuity^#.
Dick: Well, and that’s something that has been on the rise are variable annuity^# complaints and it runs the gammon from the fees and the surrender charges and loosing money when stocks go the wrong way.
Eric: You can loose money.
Dick: But what’s very interesting is the fixed annuities which would take in that hybrid annuity and everything. We’ve seen those complaints go down steadily. They kinda of hit the peak somewhere around 2006 – 2007; roughly around 200 complaints. And folks, when you think about this, 200 complaints over ten of thousands of folks that buy annuities in a given year; that’s not a lot of complaints. But now, they’ve actually  tapered down. Fixed indexed annuities sales have been way up and their complaints have tapered down to – last year – i think around 54 complaints for the entire year.
Eric: Even when we look at the variable annuity^# complaints – one hundred sixty-five complaints on variable annuity^#.
Dick: That is not a huge number.
Eric: And we should very clearly clarify here that when somebody complains about annuity, it’s typically not because of the annuity design, it’s  not the insurance company; unfortunately, it’s guys like us.                       Dick: Annuity guys.
Eric: Annuity guys or people that want to be annuity guys…
Dick: I beg your pardon.
Eric: -Who don’t fully understand the product. They don’t explain it very well, so they have consumers confused and they don’t know which direction they’re going; and their inability to articulate what product….
Dick: And Eric, this does not show up later when the person has the policy ans they have some need. They need to get additional money or they need to turn their income on or whatever; and it does not work the way they were told that was supposed to work.
Eric: They get caught with the sizzle side perhaps; the 5 percent **guaranteed roll up for income and deferral.
Dick: Or they though they’re going to earn 5 percent every year, **guaranteed. They see their account dropped a couple of years in a raw and they’re like “hey, this is not what I bought?”
Eric: That’s right! “That’s not what you’re told me”… and that’s where the complaints come from. And I guess, really to be fair to the annuity industry, we should say the number of complaints in comparison to the mutual fund^{^}s…
Dick: Or the securities industry… and that literally, looking at the reports that we’ve been looking at I think the SEC last year had over ten thousand total complaints. Now, that’s a lot of complaints. And we tend to not see that. What’s interesting about this is that we don’t see that in this financial articles a lot; we don’t a lot who talked about that.
Eric: I think we don’t want to talk about the thing we don’t want to know.
Dick: But we see a lot of talk about “ohh, this annuity this, this annuity that.” And I’ve seen now that the populous has become a little more educated about annuities; a little more understanding us out there; I’m seeing less of these negative articles showing up.
Eric: Well, I wish I could say I see less of that. Maybe I’m drawn to… it’s like everybody has a newspaper article or blog like to pick on it. The topic of this one, “Angry annuity client seek damages.” Now, that does not say “you know, really…” If you look at proportion, it’s not nearly as bad as the people with stocks that are three, four or five times as many complaints. It’s people…. the highlights….
Dick: It crabs attention and it sells advertising; and this is part of the industry. And folks, really, when you get down to why annuities are so popular and why they have so few complaints? It is because they actually do the opposite of what the market does; they make your money safe.
Eric: Right. Safety first.
Dick: It’s right.
Eric: And that’s why i always qrench when I see people that have newspaper articles – I’m not going to mention their names because they don’t deserve the heck. They’re like ohh, I like the brokers advice until they recommended an index annuity.
Dick: You would not be thinking about Malcolm Berko.
Eric: Yes, I would. I’m thinking of him too. It gives us bad names because we are in the index annuity world; we understand how they work, we understand where the benefits are and unfortunately, people that don’t live in our world…
Dick: And if you’re just, as Bill O’Reilly says “fair and balance”, there are ways that annuities can be used wrong, ways that are used correctly; they’re just simply a financial tool.
Eric: That’s exactly right. Annuities are great way to make sure you don’t live too long. It’s longevity, it’s guarding against outliving your money and we talked about that being the strength in the cornerstone.
Dick: The principle of protection; protecting what you’ve put into an annuity in terms of premium and you know that you’ll never go backwards – we’re talking about fixed annuity – and obviously, the variable is.
Eric: And we have some issues of the variable annuities^# ourselves because we don’t like to loose money and we don’t like for our clients to loose money.
Dick: Yes, we don’t like for our clients to loose money. So, are they on the rise or it depends on rather you’re talking about which type of annuity?
Eric: It depends if you’re in our office because in our office, not so much.
Dick: The complaints are under control.
Eric: That’s right.
Dick: Thank you.